Oil & gas implications in US health ruling

02 July 2015, News Wires – The US Supreme Court’s decision last week to uphold the foundation of President Barack Obama’s health care reform may have sickened many political conservatives, but language in the ruling could make it easier for industries like oil and gas to fight regulations in the future, according to legal experts.


The Court validated a key provision of the Affordable Care Act in a 6-3 vote in what is widely seen as a huge win for the Democratic administration.

The issue centred on the legality of tax subsidies in health care exchanges established by the federal US government.

Legal scholars had assumed that if the Court ruled in favour of the Obama administration it would cite a provision known as the “Chevron deference”, a procedure by which the judiciary defers to executive branch agencies in “ambiguous” regulatory matters.

The provision stems from the 1984 case Chevron USA v. Natural Resources Defense Council.

Instead, Chief Justice John Roberts, who wrote the majority opinion in King v. Burwell, said that the Chevron deference does not apply in the case of the Affordable Care Act because the legislation – and resulting regulation – because the issue was of “deep economic and political significance”, and thus the purview of the Court.

“If courts do not defer to agencies, then it will be easier for those looking to overturn agency regulations to find a receptive ear in court,” says Stuart Shapiro, the director of the Public Policy Program at Rutgers University, writing for The Hill website.

“Industries looking to overturn future regulations will be sure to cite King v. Burwell in their briefs and argue that the issue they are contesting is of deep significance.”

Shapiro, and others, note that the first big regulatory issue that would likely rise to the level of “deep economic and political significance” could be the inevitable showdown over the Environmental Protection Agency’s carbon-emission limits aimed at curbing climate change.

Those regulations, as defined by the EPA’s Clean Power Plant Act, are expected to wind up in front of the Supreme Court sometime in 2018.

While that case will likely impact coal companies more directly than oil and gas, it would not be surprising to see more industry-specific regulations on things like hydraulic fracturing and offshore drilling challenged under the latest health care ruling in the future.

News of the King v. Burwell ruling saw the hashtag #ChevronDeference briefly trending on Twitter, as a clever YouTube video produced by students at New York University Law School began making the rounds again:

– Luke Johnson, Upstream

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